A Trustee in Bankruptcy is granted a wide statutory power under section 366 of the Insolvency Act 1986 (“the Act”) to ask the Court, at any time after the Bankruptcy Order has been made, to privately examine any person believed to be in possession of the Bankrupt’s “property” or of information relating to his affairs, to assist with his or her statutory investigations.
There have been a number of decisions over the past decade concerning the interpretation of section 310 of the Insolvency Act 1989 (“IA 1986”) together with section 11 of the Welfare Reform and Pensions Act 1999 (“WRPA”) in respect of whether a trustee in bankruptcy has the ability to compel a bankrupt to draw down payments from his personal pensions where he was eligible to make such an election but had not done so.
The legal position
On 11 October 2016, the High Court10 held that statutory interest payable on an insolvency (under rule 2.88(7) IR 1986) is not “yearly interest” for UK tax purposes. Such statutory interest is therefore not subject to UK withholding tax (20%).
The facts of the case are somewhat unusual in that there was a substantial surplus in the administration and the statutory interest was estimated at £5bn. However the decision is a welcome clarification of the position. It also confirms HMRC’s previous guidance on the taxation of statutory interest (subsequently withdrawn).
The Facts
An administrator was appointed over a company out of court and the administration extended on a handful of occasions. The administrator was then replaced by block transfer, but the administration subsequently expired before it was concluded.
The new administrator therefore applied for a new administration order to apply retrospectively from the date of expiry of the old order.
Summary
The court was prepared to provide for immediate release of administrators from office and to wind up a company without presentation of a petition.
The Facts
Administrators applied to court for their release, the winding up of the company and their appointment as liquidators.
The company’s remaining asset was a leasehold interest with an ultimate landlord, the immediate landlord having surrendered its interest.
Summary
The case provides guidance for liquidators as to the appropriate exercise to conduct when deciding whether the threshold of 25% in value of creditor claims has been reached in support of a request for a creditors’ meeting under s 171.
Key point
- A liquidator is not required to apply a ‘strict proof’ test to a creditor’s claim at the requisition stage of a creditors meeting.
The facts
In November 2014, the company entered into a creditor’s voluntary liquidation.
The Investment Bank Special Administration Regime (SAR) was introduced in 2011 in response to difficulties faced in the Lehman Brothers administration. Following a review of the regime by Peter Bloxham in 2014, and a Government consultation in 2016, the Treasury has introduced draft regulations to improve the regime - The Investment Bank (Amendment of Definition) and Special Administration (Amendment) Regulations 2017.
In two months' time the Insolvency (England and Wales) Rules 2016 will come into force (with effect from 6 April 2017). This date has been long in the making the first draft of the new rules was published in September 2013.
The new rules are not intended to change the law. Their main aim is to consolidate provisions in order to reduce repetition, ensure that there is a more logical structure and modernise and simplify the language (including gender neutral drafting).
This briefing highlights a few of the key changes.